Last 6 months sees investor housing demand drop

Lending finance data for August 2015 has been released by the Australian Bureau of Statistics (ABS).

The latest data paired with the previously released housing finance commitments data shows that lending to investors has slowed sharply over recent months following the regulatory changes from APRA and the subsequent changes to lending policies from most mortgage lenders.

The above chart shows the proportion of new lending to investors across each state and territory in August 2015.

Note that when we say new lending we exclude refinances as they are not associated with a new purchase of property.

New South Wales had the greatest proportion of new lending to investors over the month however, we have seen lending to this segment of the market slow across each state and territory.

Mortgage lending to investors peaked in May 2015 prior to most Australian ADI’s implementing changes to lending policies relating to investment mortgages.

At that time, the proportion of new lending to investors was much higher in each state and territory than it is currently.

In each state and territory there has been a significant decline in the value of new lending to investors between May and August of this year.

Across each state and territory the magnitude of the fall in investor lending has been recorded at: -10.5% in NSW, -14.0% in Vic, -15.2% in Qld, -17.0% in SA, -10.1% in WA, -10.0% in Tas, -35.6% in NT and -23.5% in ACT.

While new lending to investors has fallen away over recent months, there has been a rise in new lending to owner occupiers across some states and territories while others have seen falls across owner occupier lending too.

Between May 2015 and August 2015 the changes in the value of new lending to owner occupiers have been recorded at: +22.1% in NSW, +16.5% in Vic, +4.2% in Qld, +4.1% in SA, -2.4% in WA, -8.3% in Tas, -8.1% in NT and -10.8% in ACT.

As investor lending is slowing in NSW and Vic, lending to owner occupiers is generally picking-up which should help offset some of the slowdown in investment loans.

Elsewhere there has been no significant increase in owner occupier lending, or owner occupier lending has fallen; given this the data release may point to ongoing weaker housing market conditions outside of the two most populous states.

It’s important to note that this data only includes mortgage lending domestically.

What is not clear is to what extent the weakness in investor demand domestically over recent months is being offset by an uptick in demand from overseas.

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